Daily Market Report: EURUSD, GBPUSD, USDJPY
Fed Chair Powell and Bullard upset rate expectations
EURUSD: Unable to outdo greenback performance as rate cut probabilities change
The Fed was the catalyst once more with less than expected dovish talk shifting rate cut probabilities, and helping the greenback outperform against most of the FX majors. US data was a clear disappointment with CB’s consumer confidence plummeting, new home sales well below expectations, and Richmond’s index dropping as well. The last major item before tomorrow’s final US GDP figures will be this evening’s durables report, though expectations are for a lack of change following last month’s contraction. Out of the Eurozone, there’s a dearth of significant data prior to Friday’s preliminary CPI figures. On the technical side, the pair’s price has managed to remain above all its main moving averages (including the 200-day MA), but further retracement could undo its initializing bull trend, and incentivize contrarian technical strategies instead.
GBPUSD: Short-term resistance level holding as technical bias remains bearish
A brief look at the daily chart and its clear that its bear trend technical overview has been stalling heavily at these levels, thanks to what were expectations of significant rate cuts out of the Fed. But that view has been tampered slightly thanks to recent comments from Fed officials, strengthening the USD aspect of this pair. As for the pound, it lagged against its FX peers, underperforming ahead of today’s testimony from the BoE Governor and MPC members. That will likely keep technicals at bay, and with retail bias heavy long going into the event, and institutional traders a near opposite heavy short.
USDJPY
The New Zealand dollar and the Japanese yen were top performers yesterday against the remaining FX majors, but as of this morning while the former has managed to rise following six straight consecutive days of gains after the RBNZ’s decision to remain on hold, the latter has weakened and given up yesterday’s gains instead. Powell and Bullard’s comments have reduced the likelihood of a 0.5% rate cut next month, with the market expecting a 0.25% rate cut instead. Those moves have remained in line with its current stalling bear trend that has repeatedly continued to show significant follow through, with the bulk of trading days spent in oscillation and retracement instead. A move back up however, would aid both retail and institutional traders who hold majority long bias in the pair.
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